JUDGMENT:

1. The question of law, the adjudication of which ultimately shall be decisive of the issues arising in these appeals filed under Section 35-L of the Central Excises & Salt Act, 1944 (in brief the Act), is whether various goods mentioned in the Schedule of Excise Tariff are dutiable as such or they would be, excisable goods as defined in the Act, only when they are marketable or capable of being marketed.

2. Law on this issue appears to be fairly settled. Recently a Three Judge bench of this Court speaking through one of us (Honble K.S. Paripoornan, J.) in Indian Cable Co. Ltd. vs. Collector of Central Excise, Calcutta, 1994 (74) ELT 22 while reversing the order of the Tribunal that "the conversion of PVC resin into PVC compound by the processes employed by the assessee, amounts to "manufacture" within the meaning of Section 2(f) of the Act", therefore, it "was to be charged with excise duty" held, "the provisions of the Act mandate that a finding that the goods are marketable is a pre-requisite or "sine qua non" for the levy of duty".

3. But prior to adverting to it and notice in brief how the law on this aspect has developed, it is but appropriate to mention that the precise dispute before the Tribunal was whether the appellants who are manufacturers and sellers of laminated sheets which fell under tariff item no. 68 of the tariff schedule prior to 28th February 1986 were liable to pay duty on such intermediate products produced by them, as were solutions of resin and water which were not stable, merely, because they were captively consumed. Since the question of law is common and has arisen in more or less similar circumstances in all the appeals, it is not necessary to give facts of each case.

4. The appellants manufactured laminated sheets out of various raw materials including paper and other chemicals, namely,, phenol, formaldehyde, hexamine etc., purchased from the open market after paying duty. In the process of manufacturing laminated sheets the appellants used the raw material by processing them with each other and with other materials like caustic soda, methanol and hydro-chloric acid. In this process Phenol Formaldehyde was produced out of Melamine, Formaldehyde, phenol, methanol, caustic soda, hexamine and hydrochloric acid. The process of manufacture of phenol, formaldehyde as found by the Tribunal is described thus:

"Formaldehyde is pumped into a reaction vessel and thereafter Me is added. These two material are stirred and thereafter Hydro- Chloric Acid is added, in required quantity to accelerate the reaction. The temperature is thereafter increase upto 80 degree Centigrade and is thereafter brought down to 60 degree Centigrade. At this time Caustic Soda or Methanol in prescribed quantity are added. At times water is separated from Formaldehyde. The solution which so emerges is under constant and continuing reaction at this stage. However, this solution is removed from the reaction vessel and is used in its semi- processed condition in Manufacture Of laminated sheets."

From the process of manufacture, narrated above, it is apparent that what emerged was solution as a result of continuous reaction and was taken out from the vessel in its semi-processed condition and was used without further processing in manufacture of laminated sheets. Since it was not marketed or sold by the appellants and the solution was captively consumed only the Department did not levy any duty on it. In 1979, Rules 9, 49 and 173(1) of the Central Excise Rules 1944 were amended the result of which was that even captively consumed goods produced or manufactured became dutiable. Consequently the Superintendent of Central Excise issued Notice that in view of the amendments in Rules phenol, formaldehyde and melamine formaldehyde were liable to duty. The appellants contested the notice. It was claimed that the reacting mixtures were not only unstable having short life but they were not marketable in the form they were obtained in interme